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Foreclosure Activity Reaches Lowest Level Since Onset of Recession

The Great Recession has been marked with an unfortunate degree of foreclosure activity. Since the beginning of the financial crisis, the country saw a total of roughly five million foreclosures brought to completion as people struggled with employment and fell short in their mortgage loan payments. However, as of last April, the country finally reached an important milestone: foreclosure rates, which have been steadily dropping for a while now, have fallen to pre-recession levels.

In April, the total of properties that were either foreclosed or in some state of the foreclosure process was at roughly 46,000 nationally. This represents a drop of 0.4 percent from the previous month, and 18 percent from April of 2013. Foreclosure inventory represented 1.8 percent of all homes, which is down from the 2.7 percent of a year ago.

Every individual state has been reporting a double-digit drop in foreclosure activity, with the exception of New York and the District of Columbia. The states with the most total completed foreclosures over the past twelve months have been Florida, Michigan, Texas, California, and Georgia, accounting for roughly half of the nation’s foreclosures. The states with the highest percentage of foreclosure inventory among all mortgaged homes were New Jersey, Florida, New York, Hawaii, and Maine.

According to the chief economist of CoreLogic, the foreclosure pipeline could be cleared in as little as fourteen months.

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Fannie Mae Supports Lower Income Housing with Green Initiatives

The housing market and the environment are both big hot-button items in today’s political climate, and Fannie Mae is taking steps to address both in one sweeping action. With the help of the US Department of Housing and Urban Development’s Federal Housing Administration, the mortgage giant recently announced an effort aimed at increasing the availability of affordable housing to low-income families through the use of greener, more efficient housing units.

For a while now, Fannie Mae has been issuing millions of dollars through the Fannie Mae Multifamily Green Initiative. This program was designed to provide affordable multifamily housing with utilities designed for enhanced energy and water efficiency. The aim here is to decrease the utility costs of running such properties, thereby increasing the affordability of the homes for low-income renters.

This program is being enhanced with what is being called Green Preservation Plus. Under this new program, Fannie Mae will offer financing to property owners who want to acquire a mortgage loan or refinance an existing mortgage loan for multifamily properties aimed at low-income renters. The program gives borrowers lower debt service and an increased loan-to-value ratio, thereby providing them with the funds they need to rehabilitate or improve the property with energy and water efficient fixtures.

According to FHA Commissioner Carol Galante, “The Federal Housing Administration is committed to providing multifamily affordable housing property owners with the necessary financing tools to help implement energy efficiency improvements that will help the owners and tenants save energy and save money.”

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Slow Recovery Ahead for Six-Month Low in Mortgage Rates

Back in January, Freddie Mac’s Chief Economist Frank Nothaft projected mortgage loan rates to reach 5.1% by the end of 2014. However, as we approach the middle of the year, the market is not quite living up to expectations.

Mortgage interest rates are currently at their lowest level in six months, with rates on a 30-year fixed-rate mortgage averaging 4.21% in the first week of May. This represents a drop from the prior week’s 4.29%. Further, Nothaft is not expecting rates to recover quickly; during an economic forecast event at the US Chamber of Commerce, he projected a very slow and gradual rise throughout the rest of the year. With these new trends in mind, January’s forecast is being revised to a rate of 4.65% by the end of the year.

Hopefully, this new trend will translate to a boost in the housing market. Since mortgage interest rates jumped by over a full percentage point in 2013, home sales took a hit during the past fall and winter. Nothaft is expecting home sales to speed up and match last year’s numbers by the close of 2014, with new construction potentially beating out 2013.

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